BREXIT: dramatic implications for the media industry?

On Thursday 23rd June, the UK voted to leave the EU with a narrow majority of 52%. The outlook is far from clear, but here we explore some of the implications of Brexit for those in the media industry.

Firstly, it is important to note that, until Article 50 TFEU is triggered by a formal notification to the EU, the UK will remain a member of the EU. Once it is triggered, the UK will have 2 years within which to negotiate an exit deal. The 2 year period can be extended but only by unanimous agreement of the remaining 27 Member States. If the 2 year period (and any extensions) comes to an end without a successful conclusion to the negotiations, the UK will fall out of the EU with no trading arrangements or other benefits remaining and will have to trade under the WTO rules. It is unlikely that this will be allowed to happen. More probable is that the UK will negotiate some form of special trading arrangement with the EU and, in return, the UK will agree to comply with the majority of EU standards/regulations where relevant. Therefore, whilst the UK will have little or no control over EU initiatives as a departing member (and then as a non-member) it is highly likely that the UK will still have to comply with the majority of them.

A key point of contention in the EU debate was the free movement of people. For the media industry, this key freedom allowed production teams access to locations across Europe without the need for working visas and kept staffing costs low due to the fact that there was no need to pay for working visas. Whilst the Leave campaign have made several promises to restrict this freedom, leading figures in the EU have reiterated that, if the UK wants access to the single market, it will have to accept freedom of movement. It seems likely that this will form a part of the exit deal.

The biggest area of concern is likely to be intellectual property. Historically this is an area which has been heavily influenced by EU legislation. The EU announced a review of copyright prior to Brexit, and it is expected that this will still go ahead. However, the UK will now have little input into the formation of any changes to the copyright status quo. Whilst the UK may, in principle, be outside of any new copyright regime, it seems likely that they will need to comply as part of any negotiated trading arrangement. In practice, it may be that the UK mirrors the EU copyright regime so as to minimise any administrative burden in complying with various regimes.

Most historic EU copyright initiatives have been hardwired into UK law (by UK legislation being amended or implemented) so would remain part of UK law (unless repealed or amended) following Brexit. An interesting deviation from this is the recently promulgated Portability regulation. This will apply directly (it does not need to be enacted by Member States) but if the UK leaves the EU this would no longer apply (except to the extent it is part of the post-Brexit trading arrangements).

Another area which may be subject to change is the European programming quota, as required by the Audiovisual Media Services Directive. EU service providers must abide by certain quotas for European programming and, once the UK has left the EU, unless specifically agreed otherwise it may be that content originating from the UK will no longer be considered 'European' and will not be able to go towards satisfying the quotas. In the event that it does not count, UK-originated content will lose value in the European market and may be less attractive for investors.

Satellite broadcasters will also have to pay attention as the EU Cable and Satellite Directive determines where a broadcast is deemed to have occurred, which is the state where the uplink takes place except where that state is outside the EU, in which case the relevant jurisdiction is that of the country whose satellite capacity is used.

In terms of restrictions that may be loosened, the EU has exercised a tight hold over state aid, particularly the subsidies and financial support the UK can provide to the media industry. This support can be in the form of tax credits, for example. Theoretically, upon exit from the EU the UK would be able to offer whatever state aid they liked. However, in reality it is likely that the state aid restrictions will be a part of the exit negotiation and compliance with the maximum thresholds will still be necessary.

Finally, one of the most cited reasons for remaining in the EU was the funding received in support of the creative industry. Whilst it could remain as part of the negotiations, it seems unlikely. There is certainly a risk that the support will be withdrawn or diminished but the extent of this remains to be seen.